New foreclosure filings in Cuyahoga County remain high and advance in the suburbs

2009 was the fourth year in a row that new forclosure filings in Cuyahoga County topped 13,800, even as the contours of the crisis continued shifting. The current wave has struck a broad group of people undone by unemployment, underemployment, increases in interest rates and declining home values that leave them owing more than the home is worth.

Foreclosure filings clobbered Cuyahoga County again in 2009, and theeconomic misery is spreading deeper into the suburbs.

The county saw nearly 14,800 new foreclosure filings last year -- a number virtually unchanged from 2008.

It was the fourth year in a row that new filings topped 13,800, even as the contours of the crisis continued shifting. The numbers include both mortgage and tax foreclosures actions.

Filings in the suburbs exceed those in the already battered city of Cleveland, with some cites west of the urban core seeing dramatic increases in recent years, according to data compiled by Case Western Reserve University's Center on Urban Poverty and Community Development.

Consider Rocky River and Westlake. New filings in both cities remain relatively small last year at 90 and 131 respectively, but they've doubled since 2006.

If the first wave of the foreclosure crisis rocked Cleveland with the implosion of subprime and predatory loans, the current wave has struck a far larger universe -- prime loans held by people across a broad area who have been undone by unemployment, underemployment, an increase in rates on adjustable mortgages, or declining home values that leave them owing more than their homes are worth.

"When you look at the numbers it's the really startling growth in the suburbs -- both near and far suburbs -- that I find most discouraging and the most scary," said Paul Bellamy, director of the county's foreclosure prevention program. "And everything we have indicates that it's going to go higher still."

It's not just the broad economic measures that are troubling. The bucket of loans at least 90 days delinquent has grown in Ohio and across the country.

Some may be saved through modifications. But Bellamy worries many are "zombie loans" that are effectively dead because they've been delinquent too long to be saved. He and others are bracing for their fall and a jump in new foreclosure filings.

To be sure not every filing leads to a foreclosure judgment and sheriff's sale. But this region has been pummeled with foreclosures and the resulting cascade of troubles -- including an erosion of local property values that can lead to more foreclosures.

During the last four years more than 48,900 properties have been hit with filings, or one out of every 11 properties in Cuyahoga County. That number excludes re-filed or duplicate actions that can be part of the annual new filings data.

And he takes no solace from the fact that total filings last year were almost unchanged from the year before. "Flat at such a really high number . . .I still think speaks to an almost cataclysmic state of affairs," Rokakis said.

The CWRU data tracks several years of residential and commercial filings. Mortgage foreclosures and tax foreclosures are detailed separately, each telling different stories that involve geography, damage and cleanup efforts.

Mortgage foreclosure filings: Countywide, the number of new mortgage foreclosures declined 7 percent but still remained high at 11,250. That dip may reflect delays in inevitable filings as opposed to an improved picture, said Michael Schramm, a CWRU researcher who tracks the foreclosure data.

Some say the foreclosure crisis roared through the city with such ferocity that there's simply nothing left; that most bad loans have already been obliterated.

Others suspect there's still more fuel for foreclosures, but that in neighborhoods where housing values have plummeted, mortgage companies don't even see a benefit to filing.

What's striking in the suburban foreclosures filings is the changing geography of the problem. The eastern inner-ring suburbs collectively saw a 10 percent decrease in filings in 2009. But that brought those communities roughly back to 2006 levels.

The story is far different in other communities.

Foreclosure filings have increased 60 percent since 2006 in the western inner-ring suburbs and 50 percent in outlying suburbs on both sides of the county.

Squeezed property owners are turning to foreclosure prevention specialists, including Empowering & Strengthening Ohio's People (ESOP), which works around the state and has seen foreclosures creep into suburbs including North Olmsted and Rocky River.

"We're trying to do outreach into these areas," said James Jones, ESOP's director of foreclosure prevention. "Most of the folks are very proud and they don't want their neighbors to know they're possibly in trouble."

Tax foreclosure filings: New tax foreclosures filed by the county against property owners delinquent on their taxes rose in 2009 to about 2,440 -- a 20 percent increase from 2008 and a 77 percent hike since 2006. While filings fell in the suburbs, they spiked in the city and were mostly concentrated on the East Side.

Rokakis said there are several reasons for the uptick, including a state law creating a new and faster foreclosure process for vacant and abandoned properties; absent owners who bought foreclosed homes and have since neglected both their property and their tax obligation; strapped homeowners who have lost the income needed to pay their bills; and, homeowners who owe more than their homes are worth and don't want to spend more dollars on a soured investment.

"There aren't just walkaway mortgages, there are walkaway taxes," Rokakis said. "People are walking away from these obligations in general."

Rokakis recently announced a six-month moratorium on new tax foreclosures for people who own and occupy their single-family homes. "We wanted to see if we could find a way to get people back into payment plans," he said.

But new tax foreclosure actions will continue on everything else. And Rokakis expects to see further increases in filings.

"Abandonment continues to increase," he said, as people walk away from homes they can no longer afford or are underwater because they owe more than their homes are worth.

Looking ahead: What's not included in the foreclosure filing numbers are the seriously delinquent loans that could be on the verge of foreclosure.

The Mortgage Bankers Association said that in the third quarter of last year the percentage of residential loans 90 days or more past due, but not yet in foreclosure, set a record high of 4.38 percent. In Ohio the number rose to 4.44 percent, up from 1.74 percent in the fourth quarter of 2006.

More loans are joining the pool because of persistently high unemployment. But then many stack up in this troubled and suspended state, mainly because the homeowners have not been hit with a foreclosure filing, nor been permanently moved into a modified mortgage that they can afford.

And it's not clear how many at-risk people will be able keep their homes. Some foreclosures are inevitable. But there's been widespread disappointment in the federal program meant to combat foreclosures because only a limited number of people so far have gotten permanent modifications from their mortgage companies.

"All indications are that things will get worse before they get better," Bellamy said.

United Way's First Call for Help: 2-1-1, for referrals to a HUD-approved agency that provides foreclosure prevention counseling for free. 211cleveland.org

Cuyahoga County's Foreclosure Prevention Program: 216-443-8182, for information about the foreclosure process and referrals to agencies.

Save the Dream, Ohio's foreclosure prevention initiative: 1-888-404-4674 or savethedream.ohio.gov provides homeowners and tenants information about foreclosures and includes a county-by-county listing of local resources and counseling agencies.

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